SIE practice questionmediumMutual Funds — Sales Charge Limits
Under FINRA rules, the maximum sales charge for a mutual fund is:
- AThere is no maximum limit
- B10.00% of the net asset value
- C5.00% of the public offering price
- D8.50% of the public offering price✓ Correct answer
Explanation
Why D — 8.50% of the public offering price
FINRA limits mutual fund sales charges to a maximum of 8.50% of the public offering price (POP). In practice, most fund charges are much lower (typically 3-5.75% for Class A shares). This cap applies to front-end loads. Including 12b-1 fees and other charges, total sales charges are also capped. Funds with no reinvestment features can charge less than 8.50%.
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